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We have seen many encouraging
signs of a robust economy. Nonetheless, one
hurdle we have yet to surpass is
employment levels exceeding
those of the pre-recession levels.
Newly revised numbers for 1997
indicate that we have reached the
highest employment level since
1993. This is no small feat considering
that the prolonged, severe
job loss created an out-migration
of total workers. Our labor force
dropped from 1.85 million in
1991 to 1.71 million in 1995,
but has since climbed to 1.74
million. While this is encouraging,
this is not the same Connecticut
it was four years ago.
The State has witnessed broad
changes in our workforce, and the
latest round of the long-term
projections released by the Connecticut
Department of Labor
reflect the new direction in our
evolving economy.
Projections By Industry
Connecticut has long been
reliant upon two primary industries:
insurance and defenserelated
manufacturing. Although insurance employment is not
projected to return to its pre-1991
level, there has been a resurgence
of insurance jobs in professional
and technical occupations, mainly
financial analysts, investment
specialists, sales agents and
computer specialists. This is due
in large part to a recovery of
positions in life insurance, as well
as a broadening of focus within
Connecticut's insurance industry.
We are no longer simply the
bastions of life insurance; we are
now gaining distinction in the
burgeoning Health Insurance and
Managed Care Providers sectors as
well. This seems to solidify the
state's prominence as a leader in
the insurance industry. Secondly,
defense manufacturing seems to
have finally overcome its free-fall
and stabilized its employment.
While defense manufacturing has
shown some encouraging signs of
success with federally allocated
dollars, it is not showing a strong
comeback in employment, mainly
due to the changing expenditures
in defense contracts. Overall,
Connecticut manufacturing is
expecting passive growth of 0.6%.
This, however, is not the precursor
to a slowed Connecticut job
market as it once was. In fact,
this may be responsible for the
rapid growth in other industry
sectors, particularly the service
sector.
The service sector has been
growing at a torrid pace since 1991.
Currently, it is perched at an alltime
high level and has hardly begun
to peak. While casino gaming
employment (included in the services
industries, rather
than government, for
purposes of occupational
projections) has
been a major contributor
to this growth, it is
only one facet of this diverse
sector that will
flourish over the next
ten years. The Amusement
and Recreation
Services industry will be
a solid force in the eastern
region, creating
many direct employment
opportunities as
well as many spin-off
employment gains.
However, the service industry
that will be driving
Connecticut over the next ten
years will be Computer-Related Services,
which has fueled an enormous
demand for computer engineers
and systems analysts. Besides
computer-related services, all
five projection regions are growing
rapidly in the Health Services and
Social Services industries, creating
a growing need for home health
aides, child care workers, and social
service workers. All of the regions
have been displaying strong
recent growth outside the service industries,
as well, and this is expected
to continue into the new millennium.
Construction in particular
is expected to increase in all regions
regions for both residential and commercial
endeavors.
Projections By Region
The capital region will be
growing primarily in Business
Services and Health Services
industries, with a resurgence in
the Insurance industry. Another
of the leading employment sectors
in this region has been aerospace
technology; while we are not
anticipating rapid growth, we do
expect it to increase in employment
and remain a keystone of the
region. The capital region has also
developed a niche in manufacturing
with its upsurge of machine
shops. Overall, the Hartford area
will be looking to add over 51,000
jobs by 2006 - a 9% increase in
employment.
The eastern region's 14%
increase in employment will be
driven strongly by the casinos and
auxiliary tourism businesses such
as hotels and restaurants. Other
positive indicators in this region
involve the turn-around in Engineering,
Architectural, and Surveying
Services; a stabilized
defense industry; a tremendous
growth in construction; and the
expansion of highly skilled biochemical
research employment.
The south central region is
poised to maintain the sturdiest
manufacturing base in the State, yet
retain its identity as a solid residential
community. This region will lead
the expansion of Management Services
and Business Services and will
maintain its strength in Health Services
and medical research. Also
important in this region is its concentration
on Educational Services,
especially Higher Education. The
south central region has also carved
itself a niche in the wholesale industry
where it will lead the state over
the next ten years.
The southwestern region is projected
to enjoy not only its current
employment growth but to increase
employment by over 41,000 jobs in
the next ten years, an increase of
10%. This will be led by
the growth in Securities
and Investment Services
which will introduce
several thousand new
jobs, mainly as financial
and securities sales agents.
The western region
will boast the second highest percentage increase
of employment at 12%. This region seems
poised for dramatic growth in Computer-Related
Services (72%) and General Building Construction (32%).
Overall, each region
is expected to grow at a
steady pace over the next ten years.
An apparent strong economic base,
combined with greater diversification
of employment among the industry
sectors, can lead our tiny
State to focus on the varying
strengths of its regions. At the same
time, the service sector and construction
opportunities that have
been created continue to blanket
and support our State. It is still important
to note that defense manufacturing
and insurance remain
major contributing industries in our
State, but while our commitment to
them is still strong, we have learned
to temper our reliance upon them.
According to recent reports,
small to medium-sized businesses are responsible for
most of the business growth in the
United States today. As indicated
in its International Strategic Action
Plan published by the Department
of Economic and Community
Development (DECD) in February
1997, DECD has decided to take a
proactive focus on the small and
medium-sized companies. It was
felt that the limited time and
resources of DECD would be best
used to assist those most prepared
to expand into international
markets. In addition, the newly
announced and publicized "Partnership
for Growth" is expected to
have long term ramifications on
various key industries, leading to
the expansion of small and medium-
sized "linkage industries"
throughout Connecticut.
On the negative side, however,
the recent report by the Connecticut
Economic Conference Board,
The Status of and Outlook for The
Connecticut Economy, highlights
the fact that Connecticut is a
costly state in which to do business.
As explained, this is due in
part to the high quality labor force
in Connecticut and the added
community services demanded by
these workers.
There has been and continues
to be a more "locally-based" program
to address both sides of this
equation. This program is the
federal Small Cities Community
Development Block Grant program
(CDBG) administered by the State
of Connecticut Department of
Economic and Community Development.
DECD administers this federally
funded program, issuing
grants to municipalities with
populations of less than 50,000
people to create safe, decent living
environments and expanded
economic opportunities for families
with low and moderate incomes.
Since the State assumed responsibility
for the program in 1982,
more than $155 million in grants
have been awarded statewide.
Small Cities grants focus on
programs that benefit low and
moderate income people through
housing, economic development,
job creation, and public and
community facilities, that aid in
the prevention or elimination of
blight, and that address urgent
and unique community needs.
Through this program, the
DECD recently announced the
1997 awards to 33 communities
and 4 multi-jurisdictional applicants,
much of which is contributing
to the growth and preservation
of small to medium-sized business.
Of the $12.9 million available from
the 1997 allocation, $2.1 million
has been awarded to various
communities for economic development
activities related to small and
medium-sized businesses. These
awards range in size and type from
$56,610 for job training to
$500,000 for a small business
incubator. In addition, grants for
housing/neighborhood rehabilitation,
wastewater collection systems,
municipal infrastructure
improvements, demolition of
blighted buildings, faηade improvements
to local businesses and
rehabilitation to ensure handicapped
accessibility to public
facilities were also made.
In addition, municipalities can
"band together" and apply for
multi-jurisdictional activities;
those which have a more regional
impact. Typically, these are
housing rehabilitation loan programs,
shared social service
facilities, or business loan programs
of varying type.
Small Cities CDBG has four
major types of activities which can
be funded: 1) Community Facilities,
like day care facilities, senior
centers, and handicapped accessibility;
2) Public Services, like
homebuyer counseling, elder care
services, and employment counseling;
3) Economic Development,
such as employer-based workforce
development, business loans,
business incubator facilities, and
job training; and 4) Housing,
which includes acquisition of land
or buildings, homeowner rehabilitation,
moderate or substantial
rehabilitation, demolition, and
first-time homebuyer assistance.
In the Economic Development
category, this latest round of
awards include: renovation of
space at the Palmer Building in
Ansonia into a "Small Business
Center"; continuation of a Job
Training Program in Enfield;
completion of roadway improvements
and installation of utilities
to a 17 acre, four lot area in
Putnam; site and building construction
of a 10,000 square feet.
small business incubator site in
Tolland; the acquisition and
demolition of a vacant deteriorated
building and transfer of the empty
lot to an expanding company in
Windham; facade improvements
to the Windsor Shopping Center;
expansion of a regional business
revolving loan program to include
Brooklyn, Canterbury, Eastford,
Killingly, Plainfield, Pomfret,
Putnam, Sterling, Thompson, and
Woodstock; and, establishment of
a revolving micro-loan program for
the towns of Barkhamsted,
Colebrook, Goshen, Hartland,
Harwinton, Litchfield, Morris, New
Hartford, Norfolk, Torrington, and
Winchester.
In addition to these awards, an
additional $10 million is being
provided to 27 communities and 2
multi-jurisdictional applicants in
the other three categories.
These dollars provide the State's
small cities and towns with the
means to address their own
specific business needs. These
activities can have a big impact on
the community service needs of
the communities involved. For
example, the Town of Enfield has
received a grant of $20,330 for
improvements to their Domestic
Abuse Shelter, and $45,000 for
their After School Program. The
Domestic Abuse Shelter proves a
safe haven, and a source of counseling
and other services for people
affected by domestic abuse. The
After School Program provides
activities, educational opportunities
and services to children in
families with working mothers,
allowing them to remain focused
and productive without having to
worry about "who is watching the
kids".
These are just a couple of
examples of the positive impact
that these grants can have on
communities and their economy.
At this time, DECD is reviewing
another 133 applications for the
1998 Small Cities CDBG allocation
of about $14 million. Applications
are rated and ranked by category,
and like activities compete with
each other to determine the award
winners. This "in category" competition
prevents any conflicts
which would otherwise arise when
deciding between the economic
needs and the social needs of a
community. This latest round of
awards is due out by the end of
April 1998.
Commissioner James F.
Abromaitis of the Connecticut
Department of Economic and
Community Development announced
that Connecticut communities
authorized 647 new
housing units in February 1998,
a 24.4 percent increase compared
to February of 1997 when 520
were authorized.
The Department further
indicated that the 647 units
permitted in February 1998
represent a decrease of 12.2
percent from the 737 units
permitted in January 1998. The
year-to-date permits also are up
46.1 percent, however, from 947
through February 1997, to 1,384
through February 1998.
"The first two months of 1998
indicate that strong growth in the
housing sector continues," James
F. Abromaitis said. "We have now
sustained fourteen months of
rising permit activity."
Reports from municipal officials
throughout the state indicate that
Tolland County with 87.5 percent
showed the greatest percentage
increase in February compared
to the same month a year ago.
Hartford County followed with
an 86.1 percent increase.
New Haven County documented
the largest number of
new, authorized units in February
with 163. Fairfield County
followed with 149 units and
Hartford County had 147 units.
New Haven led all Connecticut
communities with 40 units,
followed by Hartford with 38,
and Hamden and Stamford both
with 31.
The Connecticut coincident
and leading employment
indexes both reached new peaks in
the current expansion with the
release of (preliminary) January
data. The release of the January
data also corresponds with the
benchmark revisions for a number
of employment series. For example,
the non-farm and total employment
series were significantly
smoothed as compared to their
movements over 1997 as reported
before these most recent benchmark
revisions.
The coincident index, a barometer
of current employment activity,
now records positive movements
in every month since
January 1997. This
smoother movement in the coincident
index replaces a choppier
pattern based on the data available
prior to the benchmark
revisions. Since January 1997,
non-farm employment increased
by 38,700, or 2.4 percent, while
total employment rose by 28,300,
or 1.7 percent.
The leading index, a barometer
of future employment activity, rose
in January to a new peak, largely
as a result of the huge increase in
housing permits. Seasonallyadjusted
housing permits increased
by almost 150 percent on
a year-over-year basis. The mild
weather conditions in January
probably contributed to this
number. It is likely that builders
were getting a head start because
of the unusually warm weather in
January. As a result, permits may
slow in February and March.
Taking a longer view, the
coincident index was last at its
current level of 94.5 in September
1990 while the leading index was
last at its current level of 91.7 in
September 1989. Moreover, the
Connecticut economy is still below
the previous peak in the coincident
index in February 1989 of 102.5
while it is still below its peak in the
leading index in May 1987 of
100.7. As such, the current movement
and level of the coincident
and leading indexes provide no
signal of slowing or reversing in
the current recovery. As we stated
in this space last month, the
current expansion should have no
difficulty continuing through the
end of the year.
In summary, the coincident
employment index rose from 86.2
in January 1997 to 94.5 in January
1998. All four index components
continue to point in a
positive direction on a year-overyear
basis with higher nonfarm
employment, higher total employment,
a lower insured unemployment
rate, and a lower total
unemployment rate.
The leading employment index
rose from 89.8 in January 1997 to
91.7 in January 1998. Three index
components sent positive signals
on a year-over-year basis with a
lower short-duration (less than 15
weeks) unemployment rate, lower
initial claims for unemployment
insurance, and higher total housing
permits. The other two components
- average workweek of
manufacturing production workers
and Hartford help-wanted advertising,
both remained unchanged on
a year-over-year basis.
Source: Connecticut Center for Economic Analysis, University of Connecticut. Developed by Pami Dua [(203) 461-6644,
Stamford Campus (on leave)] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Kathryn E. Parr [(860) 486-0485, Storrs
Campus] provided research support.
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